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Amphastar Pharmaceuticals Reports Financial Results for the Three Months Ended September 30, 2019

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Reports Net Revenues of $80.1 Million for the Three Months Ended September 30, 2019

RANCHO CUCAMONGA, Calif., Nov. 07, 2019 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (AMPH) (“Amphastar” or the “Company”) today reported results for the three months ended September 30, 2019.

Third Quarter Highlights

  • Net revenues of $80.1 million for the third quarter

  • GAAP net income of $1.3 million, or $0.03 per share, for the third quarter

  • Adjusted non-GAAP net income of $5.2 million, or $0.10 per share, for the third quarter

Dr. Jack Zhang, Amphastar’s Chief Executive Officer, commented: “A significant accomplishment in the third quarter was the successful ramp up of our marketing efforts for Primatene® Mist. We are pleased to announce we started shipping Primatene® Mist to Walmart in October. Meanwhile, our pipeline of both generic and proprietary candidates continues to move ahead. Additionally, we recently had another complex ANDA accepted for filing.”

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

(in thousands, except per share data)

Net revenues

$

80,137

$

75,543

$

238,974

$

204,976

GAAP net income (loss) attributable to Amphastar

$

1,310

$

2,389

$

49,965

$

(7,605

)

Adjusted non-GAAP net income attributable to Amphastar*

$

5,169

$

5,721

$

14,171

$

4,168

GAAP diluted EPS attributable to Amphastar shareholders

$

0.03

$

0.05

$

1.00

$

(0.16

)

Adjusted non-GAAP diluted EPS attributable to Amphastar shareholders*

$

0.10

$

0.12

$

0.28

$

0.09

_____________________________
* Adjusted non-GAAP net income attributable to Amphastar and Adjusted non-GAAP diluted EPS attributable to Amphastar shareholders are non-GAAP financial measures. Please see the discussion in the section entitled “Non-GAAP Financial Measures” and the reconciliation of GAAP to non-GAAP financial measures in Table III of this press release.

Third Quarter Results

Three Months Ended

September 30,

Change

2019

2018

Dollars

%

(in thousands)

Net revenues:

Lidocaine

$

11,670

$

9,875

$

1,795

18

%

Phytonadione

10,916

8,968

1,948

22

%

Naloxone

10,613

9,432

1,181

13

%

Enoxaparin

9,573

18,564

(8,991

)

(48

)

%

Medroxyprogesterone

7,879

7,552

327

4

%

Epinephrine

3,756

1,881

1,875

100

%

Primatene® Mist

3,654

3,654

N/A

Other finished pharmaceutical products

17,668

15,495

2,173

14

%

Total finished pharmaceutical products net revenues

$

75,729

$

71,767

$

3,962

6

%

API

4,408

3,776

632

17

%

Total net revenues

$

80,137

$

75,543

$

4,594

6

%

Changes in net revenues were primarily driven by:

  • Lidocaine sales increases due to a higher average selling price, as well as higher unit volumes

  • Phytonadione sales increases due to a higher average selling price

  • Epinephrine and naloxone sales increases due to higher unit volumes

  • Sales of Primatene® Mist, which launched in December 2018

  • Increases in sales of other finished pharmaceutical products, including atropine, calcium chloride, and dextrose, which were in high demand due to market shortages

Three Months Ended

September 30,

Change

2019

2018

Dollars

%

(in thousands)

Net revenues

$

80,137

$

75,543

$

4,594

6

%

Cost of revenues

44,885

46,283

(1,398

)

(3

)

%

Gross profit

$

35,252

$

29,260

$

5,992

20

%

as % of net revenues

44

%

39

%

Changes in cost of revenues and the resulting increase to gross margin were primarily driven by:

  • Sales of Primatene® Mist, which has higher margins

  • Increased sales of phytonadione, which has higher margins

Three Months Ended

September 30,

Change

2019

2018

Dollars

%

(in thousands)

Selling, distribution and marketing

$

3,221

$

1,963

$

1,258

64

%

General and administrative

11,021

13,407

(2,386

)

(18

)

%

Research and development

18,606

11,340

7,266

64

%

  • Selling, distribution and marketing expenses increased primarily due to increased marketing expenses related to Primatene® Mist, including the cost of a television and radio marketing campaign, which began in July 2019

  • General and administrative expenses decreased primarily due to lower legal expenses

  • Research and development expenses increased primarily due to the development of active pharmaceutical ingredients and key components, and increased clinical trial expenses for our generic product pipeline, primarily for our inhalation abbreviated new drug applications, or ANDAs

Cash flow provided by operating activities for the nine months ended September 30, 2019, was $36.1 million.

Share Buyback Program

On November 4, 2019, the Company’s Board of Directors authorized an increase of $20 million to the Company’s share buyback program, which is expected to continue for an indefinite period of time. The primary goal of the program is to offset dilution created by the Company’s equity compensation programs.

Purchases may be made through the open market and private block transactions pursuant to Rule 10b5-1 plans, privately negotiated transactions, or other means, as determined by the Company’s management and in accordance with the requirements of the Securities and Exchange Commission and applicable laws.

The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, and other conditions.

Pipeline Information

The Company currently has five ANDAs, filed with the FDA targeting products with a market size of approximately $1.1 billion, three biosimilar products in development targeting products with a market size of approximately $13 billion, and 11 generic products in development targeting products with a market size of approximately $13 billion. This market information is based on IQVIA data for the 12 months ended September 30, 2019. The Company’s proprietary pipeline includes a new drug application for intranasal naloxone. The Company is currently developing three other proprietary products, which include injectable and intranasal dosage forms.

Amphastar’s Chinese subsidiary, ANP, currently has 14 Drug Master Files, or DMFs, on file with the FDA and is developing four additional DMFs.

Company Information

Amphastar is a specialty pharmaceutical company that focuses primarily on developing, manufacturing, marketing, and selling technically-challenging generic and proprietary injectable, inhalation, and intranasal products. Additionally, the Company sells insulin API products. Most of the Company’s finished products are used in hospital or urgent care clinical settings and are primarily contracted and distributed through group purchasing organizations and drug wholesalers. More information and resources are available at www.amphastar.com.

Amphastar’s logo and other trademarks or service marks of Amphastar, including, but not limited to Primatene®, Amphadase® and Cortrosyn®, are the property of Amphastar.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company is disclosing non-GAAP financial measures when providing financial results. The Company believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with GAAP. As a result, the Company is disclosing certain non-GAAP results, including (i) Adjusted non-GAAP net income (loss) attributed to Amphastar and (ii) Adjusted non-GAAP diluted EPS attributed to Amphastar’s shareholders, which exclude amortization expense, share-based compensation, impairment charges, and legal settlements, in order to supplement investors’ and other readers’ understanding and assessment of the Company’s financial performance because the Company’s management uses these measures internally for forecasting, budgeting, and measuring its operating performance. Whenever the Company uses such non-GAAP measures, it will provide a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most directly comparable GAAP measures set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP.

Conference Call Information

The Company will hold a conference call to discuss its financial results today, November 7, 2019, at 2:00 p.m. Pacific Time.

To access the conference call, dial toll-free (877) 881-2595 or (315) 625-3083 for international callers, five minutes before the conference. The passcode for the conference call is 8097493.

The call can also be accessed on the Investors page on the Company’s website at www.amphastar.com.

Forward Looking Statements

All statements in this press release and in the conference call referenced above that are not historical are forward-looking statements, including, among other things, statements relating to the Company’s expectations regarding future financial performance, backlog, sales and marketing of its products, market size and growth, the timing of FDA filings or approvals, including the DMFs of ANP, the timing of product launches, acquisitions and other matters related to its pipeline of product candidates, its share buyback program and other future events. These statements are not historical facts but rather are based on Amphastar’s historical performance and its current expectations, estimates, and projections regarding Amphastar’s business, operations and other similar or related factors. Words such as “may,” “might,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expect,” “intend,” “plan,” “project,” “believe,” “estimate,” and other similar or related expressions are used to identify these forward-looking statements, although not all forward-looking statements contain these words. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict and, in some cases, beyond Amphastar’s control. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in Amphastar’s filings with the Securities and Exchange Commission. You can locate these reports through the Company’s website at http://ir.amphastar.com and on the SEC’s website at www.sec.gov. Amphastar undertakes no obligation to revise or update information in this press release or the conference call referenced above to reflect events or circumstances in the future, even if new information becomes available or if subsequent events cause Amphastar’s expectations to change.

Contact Information:

Amphastar Pharmaceuticals, Inc.
Bill Peters
Chief Financial Officer
(909) 980-9484


Table I
Amphastar Pharmaceuticals, Inc.
Condensed Consolidated Statement of Operations
(Unaudited; in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Net revenues

$

80,137

$

75,543

$

238,974

$

204,976

Cost of revenues

44,885

46,283

140,432

132,680

Gross profit

35,252

29,260

98,542

72,296

Operating expenses:

Selling, distribution, and marketing

3,221

1,963

9,354

5,560

General and administrative

11,021

13,407

39,774

36,074

Research and development

18,606

11,340

49,209

40,830

Total operating expenses

32,848

26,710

98,337

82,464

Income (loss) from operations

2,404

2,550

205

(10,168

)

Non-operating (expense) income, net

(822

)

24

58,837

(347

)

Income (loss) before income taxes

1,582

2,574

59,042

(10,515

)

Income tax provision (benefit)

598

958

13,292

(2,137

)

Net income (loss)

$

984

$

1,616

$

45,750

$

(8,378

)

Net loss attributable to non-controlling interests

$

(326

)

$

(773

)

$

(4,215

)

$

(773

)

Net income (loss) attributable to Amphastar

$

1,310

$

2,389

$

49,965

$

(7,605

)

Net income (loss) per share attributable to Amphastar shareholders:

Basic

$

0.03

$

0.05

$

1.06

$

(0.16

)

Diluted

$

0.03

$

0.05

$

1.00

$

(0.16

)

Weighted-average shares used to compute net income (loss) per share attributable to Amphastar shareholders:

Basic

47,239

46,241

47,030

46,437

Diluted

50,075

48,281

50,128

46,437


Table II
Amphastar Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheet
(Unaudited; in thousands, except share data)

September 30,

December 31,

2019

2018

ASSETS

Current assets:

Cash and cash equivalents

$

85,611

$

86,337

Restricted cash

1,865

1,865

Short-term investments

12,666

2,831

Restricted short-term investments

2,290

2,290

Accounts receivable, net

45,255

52,163

Inventories

109,854

69,322

Income tax refunds and deposits

890

49

Prepaid expenses and other assets

10,472

5,485

Total current assets

268,903

220,342

Property, plant, and equipment, net

222,158

210,418

Finance lease right-of-use assets

896

Operating lease right-of-use assets

19,463

Goodwill and intangible assets, net

41,139

42,267

Other assets

12,331

9,918

Deferred tax assets

20,746

30,618

Total assets

$

585,636

$

513,563

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

75,137

$

87,418

Income taxes payable

1,400

1,187

Current portion of long-term debt

6,969

18,229

Current portion of operating lease liabilities

3,090

Total current liabilities

86,596

106,834

Long-term reserve for income tax liabilities

415

415

Long-term debt, net of current portion

38,079

31,984

Long-term operating lease liabilities, net of current portion

16,940

Deferred tax liabilities

976

1,031

Other long-term liabilities

8,977

8,940

Total liabilities

151,983

149,204

Commitments and contingencies

Stockholders’ equity:

Preferred stock: par value $0.0001; 20,000,000 shares authorized; no shares issued and outstanding

Common stock: par value $0.0001; 300,000,000 shares authorized; 52,399,044 and 47,199,907 shares issued and outstanding as of September 30, 2019 and 51,438,675 and 46,631,118 shares issued and outstanding as of December 31, 2018, respectively

5

5

Additional paid-in capital

361,705

344,434

Retained earnings

117,396

67,485

Accumulated other comprehensive loss

(5,848

)

(4,013

)

Treasury stock

(83,853

)

(75,476

)

Total Amphastar Pharmaceuticals, Inc. stockholders’ equity

389,405

332,435

Non-controlling interests

44,248

31,924

Total equity

433,653

364,359

Total liabilities and stockholders’ equity

$

585,636

$

513,563


Table III
Amphastar Pharmaceuticals, Inc.
Reconciliation of Non-GAAP Measures
(Unaudited; in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

GAAP net income (loss)

$

984

$

1,616

$

45,750

$

(8,378

)

Adjusted for:

Intangible amortization

251

271

777

1,722

Share-based compensation

4,294

3,908

13,000

12,770

Impairment of long-lived assets

11

10

194

390

Gain on litigation settlement

(59,900

)

Income tax provision (benefit) on pre-tax adjustments

(598

)

(788

)

10,422

(3,040

)

Non-GAAP net income (loss)

$

4,942

$

5,017

$

10,243

$

3,464

Non-GAAP net loss attributable to non-controlling interests

$

(227

)

$

(704

)

$

(3,928

)

$

(704

)

Non-GAAP net income attributable to Amphastar

$

5,169

$

5,721

$

14,171

$

4,168

Non-GAAP net income per share attributable to Amphastar shareholders:

Basic

$

0.11

$

0.12

$

0.30

$

0.09

Diluted

$

0.10

$

0.12

$

0.28

$

0.09

Weighted-average shares used to compute non-GAAP net income per share attributable to Amphastar shareholders:

Basic

47,239

46,241

47,030

46,437

Diluted

50,075

48,281

50,128

48,713


Three Months Ended September 30, 2019

Selling,

General

Research

Non-operating

Income

Non-controlling

Cost of

distribution

and

and

income

tax provision

interest

revenue

and marketing

administrative

development

(expense), net

(benefit)

adjustment

GAAP

$

44,885

$

3,221

$

11,021

$

18,606

$

(822

)

$

598

$

(326

)

Intangible amortization

(216

)

(35

)

12

Share-based compensation

(701

)

(96

)

(3,138

)

(359

)

107

Impairment of long-lived assets

(4

)

(11

)

4

6

Gain on litigation settlement

Income tax provision (benefit) on pre-tax adjustments

598

(26

)

Non-GAAP

$

43,964

$

3,125

$

7,837

$

18,251

$

(822

)

$

1,196

$

(227

)


Reconciliation of Non-GAAP Measures (continued)

Three Months Ended September 30, 2018

Selling,

General

Research

Non-operating

Income

Non-controlling

Cost of

distribution

and

and

income

tax provision

interest

revenue

and marketing

administrative

development

(expense), net

(benefit)

adjustment

GAAP

$

46,283

$

1,963

$

13,407

$

11,340

$

24

$

958

$

(773

)

Intangible amortization

(230

)

(41

)

11

Share-based compensation

(884

)

(86

)

(2,615

)

(323

)

68

Impairment of long-lived assets

(10

)

1

Income tax provision (benefit) on pre-tax adjustments

788

(11

)

Non-GAAP

$

45,169

$

1,877

$

10,751

$

11,007

$

24

$

1,746

$

(704

)


Nine Months Ended September 30, 2019

Selling,

General

Research

Non-operating

Income

Non-controlling

Cost of

distribution

and

and

income

tax provision

interest

revenue

and marketing

administrative

development

(expense), net

(benefit)

adjustment

GAAP

$

140,432

$

9,354

$

39,774

$

49,209

$

58,837

$

13,292

$

(4,215

)

Intangible amortization

(669

)

(108

)

34

Share-based compensation

(2,939

)

(285

)

(8,577

)

(1,199

)

257

Impairment of long-lived assets

(69

)

(23

)

(102

)

55

Gain on litigation settlement

(59,900

)

Income tax provision (benefit) on pre-tax adjustments

(10,422

)

(59

)

Non-GAAP

$

136,755

$

9,069

$

31,066

$

47,908

$

(1,063

)

$

2,870

$

(3,928

)


Nine Months Ended September 30, 2018

Selling,

General

Research

Non-operating

Income

Non-controlling

Cost of

distribution

and

and

income

tax provision

interest

revenue

and marketing

administrative

development

(expense), net

(benefit)

adjustment

GAAP

$

132,680

$

5,560

$

36,074

$

40,830

$

(347

)

$

(2,137

)

$

(773

)

Intangible amortization

(1,602

)

(120

)

11

Share-based compensation

(3,025

)

(297

)

(8,251

)

(1,197

)

68

Impairment of long-lived assets

(77

)

(4

)

(309

)

1

Income tax provision (benefit) on pre-tax adjustments

3,040

(11

)

Non-GAAP

$

127,976

$

5,263

$

27,699

$

39,324

$

(347

)

$

903

$

(704

)